Marine exports may miss target as rupee rises against dollar

Off target: Shrimp accounts for nearly 54% of India’s total marine exports worth Rs8,364 crore, though its share is just 22.43% in volume

Updated: Wed, Sep 26 2007. 12 48 AM IST

Kochi: Marine exports, which crossed the $1.8 billion (Rs7,164 crore) mark in fiscal 2007 and is expected to touch $2 billion in the current fiscal year, may miss the target by a wide margin because of the rising rupee.

The local currency, which breached the Rs40 to a dollar level last week, following the US Federal Reserve’s decision to cut its policy rate, got stronger on Monday to close at Rs39.77 to a dollar before marginally weakening on Tuesday.

Off target: Shrimp accounts for nearly 54% of India’s total marine exports worth Rs8,364 crore, though its share is just 22.43% in volume

Farmers in Andhra Pradesh have started abandoning their shrimp farms since the price offered by the exporters is so low that farming has become financially unviable. The state accounts for 75,464 tonnes of India’s total aquaculture shrimp production of 144,347 tonnes.

Shrimp accounts for nearly 54% of India’s total marine exports worth Rs8,364 crore, although in volume its share is just 22.43%.

“Many farmers at Nellore, the largest shrimp farming district in Andhra Pradesh, are no longer in farming as there are very few takers for their produce at reasonably good prices,” said Zabir Khan, secretary of the Nellore District Prawn Farmers Welfare Association.

With the rupee appreciating by more than 11% this year, the the income of exporters has gone down drastically because their earnings are only in dollars.

“In the early 1980s, Nellore first took to scientific shrimp farming and became the largest farming district in Andhra Pradesh with an annual production of around 12,000 tonnes,” Khan said. “But the situation is different now. The farmers have begun giving up shrimp farming and in the next season, production will come down to 4,000 tonnes.”

Exporters and traders are offering less than Rs200 a kg at Nellore, while in Chennai the price is around Rs300. “If the rupee appreciates further, the price realization will be even lower and the around 4,000 workers in these farms will also be affected,” he added.

S. Santhanakrishnan, president of the Hatchery Owners Association in Chennai, said, “We have not begun feeling the pinch since the stocking season has just begun and the seeds for the farmers will be available in another month. If most of the farmers decide to give up shrimp farming, we will see very few takers for our stock. This will have a chain effect on suppliers of inputs such as food and medicine. On earlier occasions, diseases had played havoc in these farms and now the rupee is making our lives miserable.”

According to A.J. Tharakan, national president of the Seafood Exporters Association of India (Seai), unlike several other sectors, the marine industry solely is dependent on farmers and most of them cannot bear the burden of the rising rupee. “Because we are losing out on account of the currency appreciation, the traders cannot offer low prices to the farmers in this sector, where 70% of the cost of production is on raw materials, and the fish sourced directly from the farmer,” he said.

Tharakan said the government should eliminate the 12% service tax at all levels. In addition, the cost of short-term pre- and-post-shipment credit can be cut to help the exporters. Currently, they pay around 9-10% interest for the facilities.

V. Vivekanandan, chief executive of the South Indian Federation of Fishermen Societies, said that since most the fishermen in the federation do not go for deep-sea fishing, the catch from the wild is limited and goes into the domestic market.

Even exportable seafood such as shrimp, cuttlefish and squid also can find takers in the domestic market.

Both Santhankrishnan and Khan have a word of caution. “The government should ensure that any incentives offered to the exporters should be passed on to the farmers. And any plans for offering sops should be done taking into consideration the farmers,” they said in unison.